Nearly 1 million Americans filed for unemployment benefits last week, a rather disconcerting development that both underscores the precarious state of the labor market and increases the urgency of additional fiscal aid.
The headline print for initial jobless claims was 965,000, far worse than the 788,500 consensus expected, and miles above a revised 784,000 from the previous week.
Coming as it does on the heels of a disappointing December jobs report, this news should serve as a wakeup call to anyone who may have inexplicably been on the fence about whether the world’s largest economy could use another dose of demand-side stimulus.
We are now 300,000 above the pre-pandemic record set in 1982. The four-week moving average rose to 834,250.
The range of estimates from nearly four-dozen economists was 747,000 to 875,000, so this was considerably worse than even the most pessimistic guess. It also marks the largest WoW rise since March.
Continuing claims missed too. At 5.27 million, ongoing claims were up 200,000 in the week ended January 2. The market was looking for 5 million.
Initial pandemic unemployment assistance claims jumped 123,311. Continuing PUA and PEUC claims in the week through December 26 dropped to 7.44 million and 4.17 million, respectively.
On the face of it, the initial claims print is very (very) bad. Outside of the pandemic context, it would be unthinkable. And, again, even in the context of the last six months, this print sticks out.
It’s possible the market will see this through a “bad news is good news” lens given that it only adds to the case for more stimulus on a day when Joe Biden was set to unveil a $2 trillion economic relief plan.
One thing’s for sure: The “V-shaped” recovery in the labor market didn’t pan out. People are jobless and starving by the millions.
has there been 1 or 2 economists that have consistently been ‘more accurate’ on their estimates over the last few months? If so, … i have a new reading list item … anybody have that data at fingertips?
If you have a Bloomie, you can see the estimates.
Not that this really changes the analysis of the jobless claims at all, but just for a little context, the population of the US has increased 43% from 1982 to 2021. A rudimentary adjustment to account for population growth to the pre-pandemic record from 1982 would make that number more like 994k. So we’re really more like just at the pre-pandemic high. Which is… I dunno… better?
Spare me. Seriously. Spare me. Spare all of us. Especially the million people who filed last week.
It is true that the population is up. But the percentage of the population covered by traditional unemployment insurance has dropped significantly. I would wager the covered by insurance percentage largely offsets population growth. The composition of the labor market has changed significantly. What has not changed is that 1mm claims is a very large number regardless of the year.
Yes, perhaps the sarcasm from the last sentence wasn’t as readily apparent as I thought it was. I don’t actually believe that “Weekly jobless claims at pre-pandemic record” isn’t any better than “Weekly jobless claims 30% above pre-pandemic record”. I was just noting that it wasn’t a straight apples to apples comparison. It’s also an interesting point you raise about the decline in the percentage covered by unemployment insurance over the past several decades.
Next week cannot come soon enough. It’s time for the adults to be put back in charge. Between these unemployment numbers and the number of deaths from COVID, the difference between Trump & Republican leadership and Biden & Democratic leadership could not be more stark. Get the $2T stimulus passed and start cleaning up the mess that Trump is leaving behind. Cannot believe that it’s not blatantly obvious to everyone in this country how badly the economy and COVID are being managed right now.
Annnnnd investors, who are as a class not among the unlucky million, remain in the “bad news is good news” happy place.